Comments on: The de facto nationalization of the global financial system http://www.theartofthepossible.net/2008/05/11/the-de-facto-nationalization-of-the-global-financial-system/ Thu, 16 Oct 2008 03:50:04 +0000 http://wordpress.org/?v=2.5.1 By: regole roulette http://www.theartofthepossible.net/2008/05/11/the-de-facto-nationalization-of-the-global-financial-system/#comment-3940 regole roulette Mon, 09 Jun 2008 08:40:29 +0000 http://www.theartofthepossible.net/?p=198#comment-3940 <strong>regole roulette...</strong> Based on texas holdem regelwerk jouer au poker gratuit casino gratis texas holdem combinaisons jeu baccarat... regole roulette…

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]]> By: quasibill http://www.theartofthepossible.net/2008/05/11/the-de-facto-nationalization-of-the-global-financial-system/#comment-2782 quasibill Mon, 12 May 2008 14:48:29 +0000 http://www.theartofthepossible.net/?p=198#comment-2782 I'm going to sound like a broken record, but... Delong's analysis is a classic example of the broken window fallacy. We can see that some (funny how he doesn't pick housing, education, or health care, isn't it?) goods have increased *only* 18% in nominal terms over a time period. But what we can't see is how much they would have decreased over that time period absent Fed intervention. For example, what if that $25 gramps gave you in 1980 and you saved, was enough to be a good down payment on a house now? Is that possible? Probably not, but it illustrates the fundamental flaw in Delong's analysis. We just don't know what true depreciation would have done for the savers from the middle class and below. Saying that inflation isn't that bad is akin to saying that war stimulates the economy - it fails to recognize that absent the destruction, the inputs would have been employed to satisfy other wants and needs. There are other, more technical flaws (most related to the distortions created by shifting the benefits of saving from the many savers to the few politically connected bankers), but that's the basic, obvious one that Delong and a few others who have made the same argument (Cafe Hayek) consistently ignore. I’m going to sound like a broken record, but…

Delong’s analysis is a classic example of the broken window fallacy. We can see that some (funny how he doesn’t pick housing, education, or health care, isn’t it?) goods have increased *only* 18% in nominal terms over a time period. But what we can’t see is how much they would have decreased over that time period absent Fed intervention.

For example, what if that $25 gramps gave you in 1980 and you saved, was enough to be a good down payment on a house now?

Is that possible? Probably not, but it illustrates the fundamental flaw in Delong’s analysis. We just don’t know what true depreciation would have done for the savers from the middle class and below. Saying that inflation isn’t that bad is akin to saying that war stimulates the economy - it fails to recognize that absent the destruction, the inputs would have been employed to satisfy other wants and needs.

There are other, more technical flaws (most related to the distortions created by shifting the benefits of saving from the many savers to the few politically connected bankers), but that’s the basic, obvious one that Delong and a few others who have made the same argument (Cafe Hayek) consistently ignore.

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